Find an Exchange Traded Fund (ETF)

Exchange-traded funds have become some of the most popular vehicles for buying and selling all sectors of stocks, bonds and commodities. ETFs combine the flexibility and convenience of trading individual stocks with the diversification offered by index funds or professionally managed, high-priced mutual funds. ETFs are traded on public stock exchanges, so unlike mutual funds, trades can be performed at any point during the market day. And because ETFs are on public exchanges, individual investors can make their own trades through an individually owned account, or by buying and selling shares through a low-cost smartphone app.

There are currently about 2,000 ETFs on the market, with a market capitalization of more than $2.3 trillion. ETFs range from funds that track stock indices to those that include large-capitalization or small-cap stocks. Other ETFs focus on emerging markets, specific parts of the world, stock sectors or specific industries.

Some funds are leveraged ETFs. These high-risk vehicles track a specific index, but are designed to do two or three times the performance of the index. If the index goes up 2 percent, a 2x bullish ETF would endeavor to go up 4 percent, and a 2x bearish ETF would endeavor to drop 4 percent. While leveraged ETFs can be quite profitable, they can also lose an investor's money quickly should the market shift direction unexpectedly. Leveraged ETFs are only wise for short-term traders.

Despite their benefits, investing in ETFs has some disadvantages. Investors of ETFs pay an annual expense ratio that can range from 0.01 percent to more than 1 percent. Because of the expense ratio, buying and selling ETFs can be more expensive than buying individual stocks, and investors who make frequent trades of ETFs can quickly see their profits sapped up with the combination of trading costs and the ETF expense ratio.